The U.S. tax system is characterized by remarkable complexity exacerbated by the dynamic nature of tax regulations which undergo frequent updates and substantial changes that occur at least on an annual basis. The main tax document, Internal Revenue Code, is made up of 9,834 sections – many of them having detailed subsections – with a six-volume set of corresponding regulations on top of that. According to the IRS, an individual taxpayer, on average, spends 13 hours and $240 to get their annual tax return prepared and submitted. For small businesses, it’s a bigger task – they typically use up around 82 hours and approximately $2,900 on tax compliance.

Overall, in 2022 individual U.S. taxpayers spent an impressive 897 million hours just on recordkeeping for tax purposes. This is in addition to the 1.15 billion hours spent on tax preparation of their individual returns. Businesses are in the same boat. They collectively put in about 1.14 billion hours of work and a substantial $48.3 billion to handle their taxes in 2022.

The intricate nature of the U.S. tax system undoubtedly triggers non-compliance: while some taxpayers experience difficulties with correct treatment of the tax rules, others are capable of exploiting ambiguities within the legislation to their advantage. Tax compliance gets even more complex when it comes to international taxation.

“According to the latest Census estimate, around 45 million individuals residing in the United States are immigrants, accounting for nearly 14% of the total population. A significant portion of them maintains close ties with their home countries through various means, including active foreign bank accounts, investments of all kinds, real estate holdings. And they are often unaware that all these assets should be reported to the IRS and U.S. Treasury, with taxes appropriately paid,” stated Yulia Frolova, founder and head of a U.S.-based financial and business consulting firm SunTax Consulting.

SunTax Consulting entered the U.S. professional services market a little over a year ago, yet managed to carve out a reputation of a reliable business partner to numerous U.S. immigrants and international business owners. Mrs. Frolova’s multifaceted financial experience and profound understanding of the intricacies of the U.S. tax system have been the primary driving forces behind the company’s success.

“There’s no doubt that tax professionals have a responsibility to educate taxpayers about their tax obligations and overall tax compliance. Competent tax experts play a pivotal role in effective tax administration, forming a vital foundation for a strong national tax system. But, surprisingly, only a minor portion of them possess the necessary expertise to handle international taxpayers – I’d venture to say that estimating around 5% would be fairly optimistic. Bearing in mind the ongoing intensity of immigration inflows, the scarcity of international tax expertise creates a major trouble for the United States by further exacerbating the national tax gap issue,” Mrs. Frolova added.

A well-functioning tax system requires taxpayers to voluntarily comply with their tax obligations. An important measure of the U.S. tax system’s administrative effectiveness is the ‘tax gap’—the aggregate difference between federal taxes owed and taxes paid voluntarily and on time. In May 2021 the Treasury Department estimated that the gross tax gap totaled $630 billion for the tax year 2019, corresponding to a voluntary compliance rate of 82.7%. This basically means that more than 17% of the ‘real’ or ‘true’ tax is not voluntarily paid by taxpayers.

SunTax Consulting made it their ultimate mission to contribute in addressing the major problem with U.S. tax gap on a micro-level. By focusing on offering professional tax advice, financial consulting and other business support to recently immigrated entrepreneurs, dual residents, and international business owners, Mrs. Frolova and her team cater to this substantially underserved group, and even more importantly, keep contributing to the national interests of the United States.

In May 2023 SunTax Consulting captured the attention of major business media outlets like Bloomberg, Yahoo! Finance and MarketWatch by unveiling their “First-Year-on-the-Market” achievements. By its first anniversary the company had served over 500 clients which collectively paid an impressive $23 million in federal and state taxes. 

Yulia Frolova attributes the success of the business venture to their ability to identify a significantly underserved niche in the professional services market; setting themselves apart from competitors through providing diverse range of services, some of which are entirely unique; having team members who are proficient in multiple languages including Russian, Ukrainian, Romanian, English and Spanish; and their dedication to delivering value to their customers.

Mrs. Frolova was born in Moldova; when she was 17, her entire family relocated to Moscow, Russia, where she completed her master’s degree in Accounting and started a career in EY – a renowned global provider of financial consulting services and one of the Big Four audit firms. This job provided Yulia with incredible opportunities to be immersed in the international environment, learn from the best practices in the consulting industry and work on comprehensive real-world business cases. Continuing to expand her professional horizons, Mrs. Frolova made the transition from consulting to managerial roles within major industrial and investment companies, all while simultaneously pursuing her degree in Jurisprudence.

Now a successful businesswoman, Mrs. Frolova has managed to achieve considerable accomplishments on the U.S. financial consulting market. Her diversified experience, ability to seize opportunities along her professional journey and genuine care of the customers’ best interests altogether have created steady grounds for the prosperity of SunTax Consulting.

Yulia Frolova holds multiple professional designations, including a very prestigious FCA (Fellow Chartered Accountant) qualification and EA (Enrolled Agent), which is the highest credential awarded by the U.S. Internal Revenue Service.

According to the IRS, just 8.5% of all registered tax preparers have earned the privilege to be designated as Enrolled Agents, granting them unrestricted rights to represent taxpayers before the Internal Revenue Service. Furthermore, only a fraction of these Enrolled Agents is qualified to handle non-resident and dual-resident cases, and Mrs. Frolova is counted among these top experts in the field.

Mrs. Frolova’s dedication to her profession is truly remarkable. Not only does she inspire her team to participate in a local tax volunteering program, providing free tax advice and preparation services for low-income families, foreign students and teachers, but she also actively engages in scholarly research regarding the potential enhancement of the U.S. tax ecosystem through the application of blockchain technology.

Following the completion of the 2023 tax season, Mrs. Frolova was honored with a Certificate of Appreciation from the U.S. Internal Revenue Service in recognition of her dedication to public service.

“I believe that being a tax and business consultant is not just about charging fees to your clients, but more about bringing added value to them and to the national economy as a whole. By educating taxpayers about their tax obligations, especially immigrants who are completely new to American tax rules, we, as tax professionals, have the real ability to make positive changes.  It is important to think globally: we do not simply file returns, claim deductions and credits and calculate taxes due – but with every single return properly completed and timely filed, we contribute to the general fairness of the distribution of the national resources and wealth among the people,” Yulia Frolova stated.

Original text is taken from CEOWORLD magazine: Yulia Frolova on Tax Professionals’ Role in Narrowing the U.S. Tax Gap and Promoting Fair National Resource Redistribution – CEOWORLD magazine